us7070

Boat Purchase Contract

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In the USA.., does a typical contract for the purchase of a brokerage boat place any restrictions on a buyer's option to walk away, and get a deposit returned, if they are unhappy with any aspect of the survey?

No.., I haven't signed a contract or put any deposit down...

 

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You're making the offer, you're in control of what the offer says.  If you want to make the purchase contingent on satisfactory survey results, and get your deposit back if you walk away, make those part of your offer.

There are lots of sample forms out there on the interwebz... here's one: http://my.boatus.com/consumer/Forms/boatus-purchase-agreement-form.pdf

Note that the seller may decline an offer, or counter-offer with different terms.  They may accept the contingency, but counter that the deposit is non-refundable.  Or whatever.  These things (like offers to purchase a house) can go back and forth several times before landing on a set of terms acceptable to both parties.

Regardless, the costs of the survey (including surveyor, yard time, hoist, etc) will normally be on you whether you walk away or not.

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I guess that the problem with my question, is that in the USA there might not be a "typical" contract...

But in other countries, this is not necessarily the case, and in some there is (apparently) a "standard" contract that is used for most sales

what i am trying to find out is.., in most cases in the USA.., can a buyer put down a deposit, get a survey, and then just say "sorry not interested", and get the deposit back?

Or, would it be common for there to be some additional requirement - for example that the survey document the need for repairs that exceed a certain percentage of the agreed sale price?

I guess I thought that such a requirement would be unusual in the USA, but I wanted to check.

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In the brokerage contracts I've seen, contingent on a survey (this must be specified), the deposit is returned if there are unsatisfied deficiencies on the survey. You should look at the exact wording of the contingency, and the exact wording of the return of deposit provisions. For example, some contracts may call out a return of deposit only for survey deficiencies the seller is unwilling to correct. I would make sure that the survey contingency is specific that the survey must satisfy the buyer (not just the broker, seller, or surveyor) who will be the sole judge of that satisfaction, and that the deposit will be returned if the buyer is not satisfied. Read the contract.

In any case, the cost of the haul and survey are on the buyer. A good surveyor will always turn up something, even if it amounts to mice nuts. 

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Use the words "To the buyers satisfaction" when putting the clauses on survey and sea trials.

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I would remind you that the contracts also vary according to the laws of different states or countries. A Canadian or Michigan contract may be very different.

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Many Purchase Agreements allow the buyer to walk away for any reason. See the YBAA Purchase Agreement as an example. As others have said though, a Seller may want to modify that section. Although back when I played race boat broker on TV, I didn't suggest that - "forcing" a sale on a reluctant buyer is just bad ju-ju all around.

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Short answer YES...Most brokerage contracts ( with a broker ) require a deposit, but the deposit is fully refundable until you ACCEPT the the vessel...Once you accept it ( complete your due diligence, including survey, sea trial, financing etc...) THEN and only after "acceptance" your deposit is in play...That is typical for a USA Brokerage agreement, although each broker association / brokerage contract will vary in specific terms a bit. 

BUT if you act nefariously...Your deposit could be in play...If you say, completed a survey and didn't pay the surveyor or boatyard for the short haul etc...But those are extreme situations for sure. Those vendors would be chasing you and follow the money to the broker who is holding your escrow funds and depending on the phrasing in the contract, the deposit may be reduced by those expenses.  We will assume in your case that you are responsible for your actions and that your deposit woudl be refunded shoudl you choose not to "accept" the vessel. ....

Hope that helps....Mikie 

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it turns out that in some other countries, the right to "walk away" after the survey, is more restricted - at east in the standard contract promoted by the brokers association, and used in most sales. 

Basically, this contract stipulates that if the survey identifies problems that can be repaired for 10% or less than the agreed purchase price, the seller has to either complete the repairs, or give a credit of the repair amount toward the sale price.., but the buyer _must_ take the boat. If the repairs will cost more than 10%, then the buyer can walk away and get the deposit back.

needless to say, I am unlikely to enter into such a contract, and am exploring the options to change it.

 

 

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Maybe don’t buy a boat through a broker. I never have. I see what I want, talk to the owner and get a survey after coming to a written contractual agreement on price. If the owner requires a deposit of more than 10% pre-survey, make it into an escrow account that he can’t touch until sale day. If the survey says”walk away”, you can. 

Of course, once a private seller talks to you, he thinks the sale will be finalized immediately and that can be irritating to the buyer.

Nothing against brokers here. I probably need one to help thin the herd...

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3 hours ago, us7070 said:

what i am trying to find out is.., in most cases in the USA.., can a buyer put down a deposit, get a survey, and then just say "sorry not interested", and get the deposit back?

If there's a clause in the agreement that says "purchase is contingent on buyer's acceptance of survey results" and that the deposit is refundable, yes.

There's no such thing as a "standard" contract.  You can write up whatever language you want on a paper towel if you want to.  Just make sure that the language protects the rights and options that are important to you.

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Here's the relevant language that was in the contract for my boat: 

5.  Vessel shall undergo a Marine Inspection (survey).  The surveyor is of the Buyer’s choice.  The costs of haul-out and survey shall be paid directly by Buyer to the haul-out yard and the surveyor at the time of survey.  Upon satisfaction with survey (and any findings), Buyer shall date and initial here __________________.

 

...and...

 

12.  Should this Agreement not be completed as herein stated, Buyer’s deposit shall be returned less any costs (including survey and haul-out) incurred by Broker or others on behalf of Buyer or at direction of Buyer.

 

...happy to email you a copy of the form used if you want to PM me your email address...

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41 minutes ago, us7070 said:

needless to say, I am unlikely to enter into such a contract

Good.  For a lot of reasons.  Not least of which, it wouldn't be hard for the seller/broker to find some skeezeball low-quality contractor to give a bid on repairs that just happens to be below 10% of the purchase price.  That's a clause that can totally be gamed *against* a buyer. 

JMHO

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